CSX's trip back to roots seems to be succeeding

WASHINGTON -- CSX Corp. Chairman and Chief Executive Officer John W. Snow said yesterday that his company's strategy of refocusing on its core transportation businesses has begun to bear fruit -- a fact Wall Street has acknowledged by boosting the value of the company's stock by almost one-half since the beginning of the year.

That stock market performance was the best in the industry. "We've gone up the most," said Mr. Snow, who spoke to reporters at a Washington hotel yesterday.

He attributed much of the gain to the company's success is moving from a strategy of diversification to one of concentrating on the businesses CSX knows best.

"In the mid-'80s, we had gone astray a bit," Mr. Snow said. "We turned our back on our roots."

CSX had been following a policy that led to pursuits in varied ventures, from oil and gas production to resort developments.

In the last couple of years the company has sold off those businesses, while retaining its principal transportation assets: a railroad, a barge company and a steamship line.

"Today we're a transportation business," Mr. Snow said.

The core of the company is the railroad, CSX Transportation, which generates $5 billion of CSX's $8 billion in annual revenue and about three-quarters of the company's profits, Mr. Snow said.

He noted considerable improvement in the company's management of the railroad. One of CSX's principal goals has been to operate as efficiently as Norfolk Southern Corp., CSX's chief railroad competitor and the industry's efficiency leader as measured by operating ratios, which show how much of a company's revenues are consumed by operating expenses.

Norfolk Southern still is ahead of CSX with an operating ratio of about 84 percent, compared with 87 percent for CSX. But Mr. Snow said, "In the first quarter we closed the gap about 3 points."

CSX's safety record is another indication of the strides the railroad has made. The company's ranking has gone from seventh to second. "We're well on our way to No. 1," Mr. Snow said.

Last year, the company reduced the number of injuries to its employees by 1,100. Since the average cost of an injury was $43,000, that improvement saved the company more than $45 million, he said. This year accidents are down an additional 50 percent, compared with the same period a year before.

While CSX has been struggling to decide what kind of company it wants to be and how it should be organized, executives have been transferred back and forth between the two main #i administrative centers of the railroad, Baltimore and Jacksonville, Fla.

"I think we've basically got it about right now in the balance between Baltimore and Jacksonville," said Mr. Snow.